Findlay Schools' finances heading for 'fiscal cliff'

Findlay City Schools' latest five-year forecast shows the district's finances taking a tumble, and other schools throughout Ohio and the U.S. may be facing the same "fiscal cliff," said Treasurer Pam Harrington. The forecast shows the school district's carryover balance of $13.6 million for the 2002-23 school year dropping to a deficit of $7.7 million by the end of the 2026-27 school year. Harrington delivered the dismal financial forecast earlier this month at the board of education's regular monthly meeting held May 15. The board approved the forecast, which will be submitted to the Ohio Department of Education. Harrington said there's enough red ink that the ODE will require the district to submit a plan to right the budget. "Inflation as well as the transition off of ESSER funds will lead to a growing deficit. A new levy and/or possible cuts will need to be considered in the future," Harrington comments in the report. ESSER is an acronym that stands for Elementary and Secondary School Emergency Relief Fund, which is money that was granted by the federal government to the nation's schools, often millions of dollars, during the COVID-19 pandemic. Harrington said those funds are about to run out. She called planning for the loss of the funds "imperative to the district's financial success." According to the report, Findlay Schools have received a total of $13.8 million in ESSER funds, with most of the money used to pay employee salaries and benefits. The school district will end the 2022-23 school year with an ESSER fund balance of about $2.9 million. With the district charging off about $2 million each school year to the ESSER account, the fund is expected to be nearly exhausted next school year. In the five-year financial forecast, Harrington said inflation drove the district's expenses for supplies up by more than 25%. In future years, she said those expenses are expected to moderate. Past efforts to avoid deficit After a year of disappointing returns at the ballot box in 2020, when the schools were actively seeking an additional levy, administrators recommended closing Lincoln Elementary School and Jacobs Primary School in the 2021-22 school year, and reorganizing the district's elementary schools in an effort to save money. The plan then was to stay off the ballot as long as possible and to rely on the savings and the ESSR funds. The 106-year-old Lincoln Elementary building, located at 200 W. Lincoln St., was closed. Jacobs Primary, located at 600 Jacobs Ave., was repurposed. A superintendent's finance committee recommended closing two elementary schools in October, just prior to the district's third and final attempt to pass an additional tax in 2020 to support district operations. The levy was defeated. Voters last approved additional operating money for the city schools in 2004, with a five-year, 5.9-mill levy. In May 2014, voters agreed to make that levy permanent. The school board has also been relying heavily on the district's permanent improvement funds. New expenses In April, Findlay school board awarded a $3.2 million contract to an Oregon, Ohio, company to install artificial turf on all of the district's athletic and activity fields. Maumee Bay Turf, LLC, was selected by school officials through a request for proposals on the project. The company submitted the lowest cost among responses from "multiple contractors," according to the agreement. The work will be completed this spring and summer. In March, the school board voted to borrow $2 million for the turf against the district's permanent improvement levy. District voters approved the continuing 2.5-mill levy in May 2006. The levy generates about $2.1 million in revenue each year. The money is earmarked for improvements meant to last five years or longer. State law only allows school districts to use 50% of the collections from permanent improvement levies to pay down debt. The board still owes about $4.8 million on the $6 million it borrowed against the permanent improvement fund in 2021 for several projects meant to ready the district for the reorganization of the elementary schools last school year. Payments on that debt total about $630,000 per year. The balance of the project will be paid through donations, including $560,000 from the Trojan Club, the district's athletic boosters. The club has pledged $175,000 this year, plus an additional $55,000 each year for the next seven years. National Lime & Stone, 551 Lake Cascades Parkway, has volunteered to donate the gravel needed for the project. The board was able to pay off money also borrowed against the permanent improvement levy for its new SafeDefend system. In August, the school board approved an $887,050 contract for the system, offered by a company based in Olathe, Kansas, making it the first school district in Ohio to purchase the system. The contract includes a yearly maintenance fee of $18,000. The Findlay-Hancock County Community Foundation's Board of Trustees awarded the district a $100,000 grant to help pay for the system, and Findlay City Council made another $100,000 contribution from the $4.2 million it received from the federal American Rescue Plan Act of 2021. SafeDefend utilizes multiple means of communication in the event of an active shooter crisis and provides staff with crisis management options and training, including but not limited to defensive force and first aid. The state grant, awarded in February, totaled about $1 million, allowing the district to pay off the system and have money left for its ongoing maintenance, Harrington said. Findlay's schools were among more than 900 Ohio schools to receive funding through the state's K-12 Safety Grant Program.